Light Ends

Market Overview

E/W rips higher

Naphtha

The arb to Asia has reopened strongly both from EU and US alternatives, signalling Asia is scrambling to secure Western barrels again as AG supply is cut off a second time.

E/W naphtha explodes to $70/mt for August contract and above $100/mt in the prompt. This underlines AG naphtha being in crisis mode.

The surge in Med physical premiums reflects the intense competition for Med-origin naphtha as both the reopening Asian arb and firm European demand pull for the same barrels.

Bullish E/W, even with EBOB strength

MOGAS

The threat of limitations to Asian crude supply, from the Houthis in the Red Sea, has lifted the Asian gasoline complex.

Similar to diesel, there is real concern Chinese exports could be hampered especially, but the strength in AG naphtha is also a pull for gasoline in the east

The broader oil market tightness seen across prompt spreads is also evident in EBOB, but the strength in East-West trumps this, matching the pattern seen in naphtha.

Even with the sharp jump, the latest E/W values are only back to levels seen a month ago, indicating further upside still exists. Landed values for exports are still competitive – e.g. Singapore still pricing below AG/Houston for September delivery into Australia.